The growth of the SMSF sector seemingly knows no bounds at the moment, with the June 2013 Australian Taxation Office (ATO) statistics showing 33,546 net establishments for the financial year.
That brings the number of existing funds to 509,362, which are looking after the retirement savings needs of 963,852 members.
And it looks like as long as this momentum continues so will the perception of threat from other quarters of the superannuation industry and financial sector in general.
It is human nature to react when one is threatened. Often this comes in the form of attack and recent weeks have seen new strikes against the SMSF sector.
This time around it’s about the increasing amount of SMSF investment in residential property and how this alarming trend could overheat property prices and end up creating a property bubble.
The message came from an unexpected source too, with the Reserve Bank of Australia (RBA) buying into the argument.
Honestly though, it smells like just another excuse to have a go at SMSFs, with no statistical evidence to back up any of these naysaying claims.
Let’s put some perspective on these alarmist claims. According to research house RP Data’s “Spring 2013 Property Capital Markets Report”, the residential housing market in Australia had a total estimated value of $4.9 trillion as at June this year.
Couple that with the latest ATO statistics, which show the total portfolio allocation by SMSFs to residential real property was $17.5 million at June 2013. Simple arithmetic would suggest this consists of less than 1 per cent of the residential property pie.
I’ve heard of creative accounting, but this would have to be the most creative of all to be able to get to the RBA’s conclusion.
You would like to think some sort of research on the real facts and figures is done before misleading statements like this are made in the public domain.
But it’s not like we haven’t seen this sort of thing before. Casting my mind back to 2008, I remember the then superannuation minister Nick Sherry expressing concerns about overselling of SMSFs in response to the sector’s phenomenal growth rate.
The thought behind it was people who had what was considered an insufficient asset base were being advised to set up an SMSF.
Back then he was suggesting the government would be imposing a real crackdown on this activity and potentially introducing a mandatory minimum balance be imposed before an SMSF could be established.
But the reality was the sector was in pretty good shape and without need for any drastic intervention and certainly not what was being proposed. This was a message reinforced by the Super System Review chaired by Jeremy Cooper, and initiated by Sherry.
This latest alarmist rhetoric about the SMSF sector can only lead to poor outcomes for individuals wishing to use what they consider to be the most appropriate form of retirement savings vehicle for them, especially if it means greater and more restrictive legislation.
The time has come for industry leaders from all quarters to show greater responsibility and be armed with more accurate information before they open their mouths to create more unfounded misgivings about SMSFs.
